IPO-bound Ecom Express used incorrect numbers in DRHP, says Delhivery
These are related to metrics such as shipment volumes, Service EBITDA and cost per shipment
 "IPO-bound Ecom Express used incorrect numbers in DRHP, says Delhivery")
Logistics firm Delhivery has alleged that its IPO-bound rival Ecom Express has misrepresented numbers related to the two companies’ business metrics in its draft red herring prospectus (DRHP). These numbers relate to metrics such as shipment volumes, Service Ebitda, and cost per shipment, it said.
SoftBank-backed Delhivery, which is already listed, said its information was incorrectly used for comparison in the DRHP.
Ecom Express said it had shipped 514.41 million shipments in FY24, while Delhivery handled 740 million packages during the period.
However, in a filing to the stock exchanges on Friday, Delhivery alleged that this comparison was flawed. For example, Delhivery counts a shipment — even if it is not delivered to the destination and returned to origin — only a single shipment. But the peer (Ecom Express) counts it as two shipments as the to and fro transportation are billed separately.
Ecom Express declined to comment on the issue.
Delhivery said that the Service Ebitda calculation is not like-to-like. This cannot be compared due to lack of clarity on consistent definition of “corporate costs”. The firm also highlighted Ecom Express’ cost per shipment (CPS) calculations. It said that CPS comparison is problematic on several counts.
For instance, per-shipment metrics hugely vary depending on shipment profile — weight profile for Delhivery and the peer will be significantly different due to different client mix. It said peer has top customer concentration of 52% of revenue (versus 16% for Delhivery), resulting in Delhivery’s average weight per parcel being two-times of the peer.
Shipment volume used in the denominator of CPS calculation not like-to-like — peer likely double-counts RTO shipments, thereby overstating volumes and understating CPS. Peer’s CPS will increase by Rs 7 (15%) when adjusted for shipment volumes comparable to Delhivery.
Ecom Express’ claim that it offers its services in 27,000 pin codes. However, Delhivery highlighted that as per Government of India, there are 19,300 unique pin codes in the country. The company, which is backed by Warburg Pincus, Partners Group, and British International Investment, plans to raise Rs 2,600 crore via its IPO. It filed the DRHP with capital markets regulator Securities and Exchange Board of India (Sebi) on August 15.
The IPO will consist of a fresh issue of shares worth up to Rs 1,285 crore while existing investors will offload shares aggregating to Rs 1,316 crore.
> Delhivery said service Ebitda profit cannot be compared due to lack of clarity on consistent definition of “corporate costs”
The allegations
> Delhivery said service Ebitda profit cannot be compared due to lack of clarity on consistent definition of “corporate costs”
> Ecom Express said it had shipped 514.41 mn shipments in FY24, while Delhivery handled 740 mn packages during the same period. However, Delhivery alleged this comparison was flawed
> Delhivery said Ecom Express’ cost per shipment comparison is problematic on several counts